Arm targets 50% of data center CPU market by 2025, signaling major competitive challenge to x86 dominance in servers.

Arm Holdings aims to increase its share of the global data center CPU market from 15% to 50% by the end of 2025, according to Mohamed Awad, senior vice president of infrastructure at Arm, who made the claim in an interview with Reuters. The company's ambitions center on AI servers, including offerings like Nvidia's GB200 and GB300 machines, custom silicon from large cloud service providers, and Ampere Computing-based systems.

The data center market has historically been dominated by x86 processors—AMD's EPYC and Intel's Xeon CPUs—due to the greater availability of data center-grade software built for x86 architecture. However, this landscape is beginning to shift. Some server programs are now developed for Arm-based processors first and then ported to x86. Google and Microsoft have also started designing data center processors using Arm's technology, though these projects remain at an earlier stage compared to Amazon's efforts.

Amazon Web Services has emerged as a major Arm adopter through its Graviton CPUs, which power many of its instances in place of AMD or Intel processors. Half of the processors used by AWS are Arm-based Graviton CPUs. Ampere Computing, a chip designer initially backed by Oracle and now owned by SoftBank (which also owns Arm Holdings), similarly offers Arm-based CPUs for data centers.

Nvidia is becoming another significant supporter of Arm in the datacenter space. The company's Grace CPUs feature 144 Arm Neoverse V2 cores and power the GB200 and GB300 AI servers, which are expected to gain popularity with large cloud service providers. Beyond these major partners, Arm offers compute subsystems (CSS) based on its Neoverse cores, enabling chipmakers to build data center-grade CPUs with relative ease. Arm is also reportedly developing its own CPUs for large cloud service providers such as Meta.

Despite these efforts, Arm's market penetration remains limited. The company's $2 billion in AGI CPU sales have not yet penetrated 5% of overall market share, according to analyst reports. However, industry forecasts suggest potential for significant future growth, with one report claiming that Arm chips will power 90% of AI servers based on custom processors by 2029. If major players like Meta deploy Arm-based processors in volume, the company could control a substantial portion of the server CPU market, given Meta's status as one of the world's largest server users.